Oman remains committed to its long-term renewable hydrogen ambitions, although the pace of global developments has slowed and some companies have withdrawn from project plans in the country, delegates heard at the Green Hydrogen Summit Oman in Muscat on 1 December.
Speakers at the event widely praised Oman's abundant potential for renewable power generation and commended the government for its efforts to streamline support for the sector.
But the perception of a "reality check" that has been felt in many parts of the world following the inflated expectations for renewable hydrogen in the early 2020s has also reached Oman.
The current state of the industry is challenging globally, especially around costs, regulations and supply chains, said Oman's minister of energy and minerals Salim Al Aufi. Developers may need more support to realise their projects as "some of them will stumble" and "some of them will want to leave", he said.
Some firms have already withdrawn their plans. BP and a consortium led by France's Engie and Posco have shelved large renewable hydrogen and ammonia projects in the country, state-owned hydrogen company Hydrom's managing director Abdulaziz Al Shidhani said.
Seven major projects are still planned in the country and could between them produce some 1mn t/yr of renewable hydrogen by 2030-31, Al Shidhani said.
But Al Aufi acknowledged that reaching the country's target of producing at least 1mn t/yr by 2030 will be an uphill battle.
"We have to mobilise more than 40mn solar panels in about three years' time, we have to mobilise more than 2,000 [wind] turbines, more than 6,000-9,000 wind blades and we haven't done any of that yet," Al Aufi said.
The slower pace of developments globally is therefore a "blessing in disguise," Al Aufi said. "It is allowing us to do things at a fast-enough pace" but without the "hype" that created "a lot of heat" across different parts of the value chain, such as equipment manufacturers and contracting firms.
There is "a lot of noise" that is making Oman and some of its partners "a little bit uncomfortable". But this is a "very short-term noise" and the focus must be on the long-term plans, Al Aufi said, noting that "no one at all" is questioning whether hydrogen in general is the right path to pursue for Oman. "I think we are doing exactly what we should have been doing and we are on the right track."
Numerous developers highlighted that Oman's decision to designate so-called "national champions" for different parts of the value chain stands out as a key advantage globally. Hydrom has been set up as the entity in charge of land allocations and as a single point of contact for issues such as permitting, while various subsidiaries of state-owned energy company OQ have been put in charge of developing common user infrastructure like pipelines and storages and electricity transmission systems.
And despite the prevailing challenges, Oman has the first tangible results to show for its efforts. Indian firm Acme has started construction of the first phase of a renewable ammonia project in Duqm, backed by financing support from the Indian government and an offtake deal with Norwegian fertiliser giant Yara. Meanwhile, Acme's compatriot Jindal Steel has started construction on a direct reduction iron plant that will transition to renewable hydrogen use in the future.
The government is hoping that an incentive package unveiled in August can help more projects towards realisation. Among other measures, the incentives include reduced land fees in early development stages and the trimming of royalties over 15 years. Between them, the different measures represent a commitment of around $3.6bn-4bn to the hydrogen sector, Hydrom's Al Shidhani said.
